Citigroup Sued by Salomon, 99, Over Secretary Who Stole

Banker William R. Salomon leaves Newark Federal Court after testifying in the trial of his personal secretary, Karen R. Febles, who is facing trial on charges that she stole $1.3 million from him to support a lavish lifestyle. Photographer: Emile Wamsteker/Bloomberg News

May 11 (Bloomberg) -- Citigroup Inc. was accused in a
lawsuit by William Salomon of supplying the 99-year-old former
Wall Street banker and son of the founder of Salomon Brothers
with a personal secretary who was later convicted of stealing
from him.

Salomon sued Citigroup over Karen Febles, who was convicted
in federal court in Newark, New Jersey, of stealing $1.3 million
from him to pay for cars, real estate, cruises and jewelry. The
lawsuit, filed May 9 in state court in Manhattan, claims Febles
stole $3 million through her “systematic theft.”

“Citigroup failed to institute any supervisory procedures
whatsoever over Febles, notwithstanding that she was its
employee working off-site for an elderly man and assisting him
with personal financial matters,” Salomon’s lawyers claimed in
the breach-of-contract complaint.

In 1933 Salomon began work at Salomon Brothers, the
investment firm founded by his father and uncles, and he was a
managing partner from 1963 to 1978. After retiring in 1981, he
signed a consulting pact that gave him an office, two
secretaries and support services, according to the complaint.
Citigroup, which bought the firm that became Salomon Smith
Barney Holdings Inc., assumed the contract in 1998.

“Ms. Febles acted entirely outside the scope of her
employment with Citi in handling the personal finances Mr.
Salomon entrusted to her,” Mark Costiglio, a spokesman for the
New York-based bank said in an e-mail. “She was prosecuted and
convicted with Citi’s full cooperation. It is Ms. Febles, not
Citi, who is responsible for Mr. Salomon’s financial loss.”

‘Trusted Completely’

Febles, 48, began working in 1997 for Salomon, who soon
decided he needed only one secretary, according to the
complaint. Salomon “trusted Febles completely” to write
personal checks, review his bank accounts and pay his household
employees and other expenses.

In 2005, she began doctoring his checks to increase the
amounts and pocket the difference, Salomon claimed. She also
cashed checks by him, “just keeping the cash,” according to
the complaint. U.S. prosecutors made similar claims at Febles’s
trial in January, where Salomon testified.

“There’s no reason to have a personal secretary if you
can’t trust her,” Salomon told jurors.

They convicted Febles on Jan. 14 of wire fraud, money
laundering, and bank fraud. She also was convicted of failing to
pay more than $250,000 in taxes. She is scheduled to be
sentenced on June 5 in Newark. She faces as long as 30 years in
prison on the bank fraud and wire fraud counts.

At the trial, prosecutors said she used the money she stole
to buy a Range Rover and a Mercedes-Benz, spend $100,000 on
cruises, and pay more than $50,000 in rent one year. Citigroup
paid her $90,000 to $95,000 a year, prosecutors said.

The case is Salomon v. Citigroup Inc., 651683/2013, New
York state Supreme Court, County of New York (Manhattan). The
criminal case is U.S. v. Febles, 12-cr-00406, U.S. District
Court, District of New Jersey (Newark).